In his recent state of the union address, President Obama declared, “we’re offering millions the opportunity to cap their monthly student loan payments to ten percent of their income, and I want to work with Congress to see how we can help even more Americans who feel trapped by student loan debt.” But with interest at 6.5% and loans exceeding $50,000, no one has time to sit back and pray that Congress does something special.
For those of you on a tight budget, paying off student loans first may not be at the top of your priority list. Any extra cash you may have will probably be stashed away. But a student/recent graduate shouldn’t lose sight of how important it is to focus on paying off debt as quickly as possible. If you start now, saving for the future won’t seem as daunting anymore.
To put this into perspective, let’s take a typical student loan of $15,500, payable over 20 years at 4.5% interest. The faster you pay this amount off, the more likely you will have enough money to spend later on. Sounds simple right? It actually is……in reality, paying off your $15,500 loan in five to ten years as opposed to twenty years, will save you roughly between $8,000 to $11,000.
Students have time and time again expressed how overwhelming paying off student loans can be. So much so that when your school required you to attend that infamous loan exit counseling session right before graduation, you blocked out any valuable information as being nonsensical and unintelligible. In fact, no one told you that there are easy ways to pay off your loan by simply volunteering your time to a noble cause.
So how do you go about doing this? Not to worry, we have you (and your student loans) covered! Just read our tips below to learn more about how to pay off student loans fast.
1. Public Loan Forgiveness
It is no surprise that a little good can go a long way. For those students who take the public service route, the government acknowledges your service by forgiving your loan once certain conditions have been met. Members employed full time with a public service organization are covered under this scheme. Once 120 loan payments have been made, your loan is forgiven. However, all 120 payments must be made while working with a public service organization. How much of your loan is forgiven? Believe it or not, your entire loan is forgiven once you have successfully made 120 payments. Thought that public service job wasn’t for you? Think again!
For more information, check out: https://studentaid.ed.gov/sites/default/files/public-service-loan-forgiveness-common-questions.pdf
Btw, did we mention that the IRS doesn’t consider the amount forgiven taxable? That’s a pretty sweet deal. Unfortunately, for those of you with private loans, this option isn’t for you.
2. Loan Forgiveness Program for Teachers
This Stafford Loan Forgiveness program was encouraged to support teachers. Under this program, if a borrower teaches full time for five consecutive, complete academic years in certain schools or educational service agencies that serve low-income families, they may be eligible for forgiveness of up to $17,500 of student loan principal and interest. Teachers are also eligible for a grant of up to $4000 a year through Teach Grant by teaching students from low–income families.
3. Paid Volunteer Work
The word paid and volunteer sounds like a bit of an anomaly. But in the student loan world, not so much. Let’s take the example of SponsorChange. Sponsorchange.org stands by its motto of “helping those who give back, pay back.” Their vision is pretty genius—they connect skilled graduates with high impact organizations that need them. When a student volunteers with an organization, the organization sponsors a portion of their student debt for the time spent volunteering.
The folks at SponsorChange are currently working a cool new “virtual volunteering” program that is slated to launch later this year. Here, volunteers would contribute their hours doing work that can be accomplished remotely for a nonprofit that may be in another city. Looks like paid volunteer work just got a whole lot easier! (Watch this space for more details.)
Another great initiative is Zerobound.com. You commit to a volunteer project and Zerobound finds sponsors to help you raise money. The difference here is that you set the amount you want to raise, and the website does the rest. They find sponsors and organizations that might be interested in your skills. Once a successful match is made, you can crowdsource your way to paying off some of your loans.
Finally, you can always sign up for the Peacecorp or Americorp to get some of your loans paid for. It’s a great way to dedicate your life to changing others lives, all while paying off some of your student debt.
4. Working with underserved communities
Another easy way to reduce student debt is by working with underserved communities. Doctors, nurses, vets, teachers, and even librarians can benefit from state and federal funding that helps pay off loans provided the candidate works in an area that really needs them. This could be a rural community, schools and medical clinics that serve low-income families, or underserved minorities such as Native Americans.
For example, the National Institute of Health will pay up to $35,000 a year in loans to qualified clinical researchers and medical professions who work in underserved areas for two years.
It’s never too late to start paying off your student loans. All it takes is a weekend away from your friends and a helping attitude. Once your debt free, your friends might need to start finding ways to keep you away!!